Jefferies cuts ASX-listed Xero's PT amid AI risks and stiff US competition

** Jefferies cuts price target on ASX-listed Xero XRO.AX to A$67 from A$77

** Brokerage says AI unlikely to replace the software firm's accounting software but AI agents may own the user interface and workflow layer, running the risk of making XRO a “headless” accounting software, constraining pricing power

** Notes US small business accounting is getting more competitive and Xero needs to spend more on US marketing to win customers and build its brand

** Lauds XRO's product offering and its efforts to embed AI, but also flags that monetisation of these products is still fairly limited

** Cuts its EPS estimate on the company by 8% in FY27 and 7% in FY8 due to higher interest costs and US losses

** Avg rating of 13 analysts is "buy" or higher; their median PT is A$118.5, LSEG-compiled data shows

** Stock down nearly 48% so far this year as of last close